How GM Plans To Manage Chevrolet In Europe Through The Economic Downturn

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Susan Docherty has seen it before: the double-digit sales slides, cash for clunkers programs, and the GM bankruptcy. That was in 2009, when she was the Vice President of sales at GM North America, and then the head of the region’s marketing. Now, she’s in charge of Chevrolet and Cadillac in Europe — a region where both brands are particularly (and perhaps even notoriously) weak.

Of course, the industry-wide 6 percent decline in automotive sales so far this year and the 8 percent drop seen in 2012 aren’t signs of an easy road ahead — so Docherty seems to have her work cut out for her. Interestingly, she refuses to join fellow European carmakers in the race to slash prices — a strategy that emulates GM’s methodical approach to growing Cadillac. Both aren’t as easy as they may seem, given that some automakers in Europe are offering huge discounts (to the tune of 7,000 euros, or roughly $10,000) per vehicle. Meanwhile, some European nations are contemplating offering scrappage schemes similar to the cash-for-clunkers program — making it difficult to plan production. So, how does Docherty plan to get through the European slump?

“I know the market will bottom out, and I know that it’s going to come back,” Docherty told Auto News. “It’s easier the second time around because you have the benefit of knowing which of the levers you pulled that worked.”

Before coming to Zurich in the beginning of 2012, Docherty spent 18 months heading up sales and marketing for GM International Operations (GMIO) in China — one of The General’s few geographic business units that is seeing steady and oftentimes significant increases in year-over-year sales.

To start, Docherty will manage Chevy and Caddy through the European crisis using a somewhat different approach.

“I’m not panicked about it,” Docherty says. “What you have to do is manage through this and watch your inventories like a hawk and understand what’s going on uniquely in every single different country.”

Aligning inventory to market demand is a crucial aspect of the way in which the New GM conducts business, a quality that the Old GM wasn’t known for. Chevrolet started 2012 with high stocks of inventory, which cost money to clear in the form of profit-sapping incentives. By contrast, inventory was 32 percent lower at the start of 2013.

Helping Docherty on the inventory front is Jim Bunnell, who previously headed up GM’s U.S. dealership network. Docherty appointed Bunnell as Vice President of sales as of December 1st, and the pair has “gone back and looked at some of the techniques, the short-term tactics, that we ned to keep the business moving” during the U.S. recession.

For instance, Chevrolet has begun offering three years of maintenance in Scandinavia and the Baltic region — a strategy that should attract (or at least speak to) those concerned about decreasing wages or losing their jobs. These consumers won’t have to worry about spending money on oil changes and tire rotations. Docherty ran a comparable campaign during the recession in the U.S.

Chevy Europe will also curb fleet and rental sales due to deteriorating prices. On the other hand, retail sales have become extremely difficult as unemployment rises. In response, Chevy is offering 0 percent financing, but is avoiding discounting its vehicles.

“There is a price war. Everything is about ‘deal, deal, deal’ and ‘price, price, price,” said Docherty. “That doesn’t make sense.”

At the end of the day, it’s a solid possibility that Chevy will lose market share in 2013 in key markets like Germany and Spain. But it will do so while not having marked down its prices to the levels of the competition.

In 2012, Chevrolet sold 195,000 cars in Europe, earning it a 1.4 percent market share — slightly higher than Buick’s share of the U.S. market The 2012 growth marked the fourth consecutive year of market share gains for Chevy in Europe and Docherty said she will be “cheering” if the brand’s market share grows in 2013. But without lowering prices that would hurt the brand’s reputation in Europe, that might prove to be a difficult feat.

“That’s the better way to manage the business,” she said, “until the market comes back.”

The GM Authority Take

Sounds like Ms. Docherty’s strategy involves not giving away the car, the factory, and the house — which is encouraging, to say the least. But we wonder if Chevy’s reputation in Europe would actually suffer if GM were to incentives sales with a few discounts here and there. If nothing else, The General should make it its top-most priority to grow Chevrolet and Cadillac in Europe… because that is one market in which one does not want to be seen as “weak”.

What GM needs in Europe, is focusing on Opel/Vauxhall, not Chevrolet and especially not Cadillac at all and provoke cannibalization. Most Europeans don’t even know Cadillac, perhaps the’ve heard about it in Hollywood movies. Cadillacs won’t be a success in Europe, it will work in Asia and South-America but not in Europe where you have established european(!) premium brands like Mercedes, BMW and Audi. they stand for quality. american cars stand for quality problems… I don’t say this is true but that’s how Europeans think about it.
And how should Chevrolet be positioned above Opel??? Chevrolet only survives because of it’s cheap prize and nothing else. It hans’t a heritage, not a good design and not a good image…

Opel still has very bad reputation because of quality problems about 10-15 years ago. Chevrolet is more or less a “new” brand in Europe and has potential to be positioned somewhere under BMW, Mercedes and Audi unlike Opel. Cadillac is a premium brand in Europe and can take it place among other premiums.

Don’t know from where you are, but this sounds very, very unrealistic for me as a European. Chevrolet is seen as a Dacia or Kia competitor. Can you imagine a Dacia somewhere under BMW or Mercedes??? Cadillac is a premium brand, that’s right…but Lexus and Infinity are also premium brands which tried to establish in Europe and they failed. Yes, Opel has a bad reputation but a much better reputation than Chevrolet. Chevrolet stands for nothing, only for a cheap prize.

I’m a European too. Where I live, Dacia is a cheap car. Kia is in Skoda class just like Opel. Chevrolet does not really have a position because it’s still a rare brand. But everyone knows Corvette and Camaro and Chevrolet could easily find it’s place much higher than Opel.

Chevrolet above Opel in Europe!!!! This is nonsense, Chevrolet have a very very limited role to play in Europe as a bargain basement brand and as for the comparisons with Dacia they were launched in the UK just 6 months ago and last month overtook Chevrolet sales in the UK and they didn’t spend $553m of sponsorship money to do it. GM needs to wake up and smell the coffee – Vauxhall in the England and Opel in Europe is all they need, Chevrolet just adds costs and complications to the issue.

The only logical brand strategy in Europe for GM would be positioning Chevy UNDER Opel. And as GM Europe has announced it wants to move Opel up-market in order to create space for Chevy UNDER Opel, this is exactly what will happen. Other signs of this are the more luxurious image of the Opel Mokka as compared to it’s sister the Chevy Trax, same goes for Astra > Cruze, Corsa > Aveo, Insignia > Malibu, Add to that the premium(wannabe?) Opel Adam in the mini segment, compared to the budget Chevy Spark.

Opel has exactly the same image problems as Buick has in the US. Add to that the fact that a Buick Regal is an Opel Insignia, a Buick Verano is an Opel Astra, a Buick Encore is an Opel Mokka, and you come to the conclusion that from Luxury to budget it sis going to be:

@ werwert: Opel is above Kia/Hyundai and Skoda. Skoda is perhaps a bit controversal because they moved upmarket in the last years. Opel is in the same class as Ford, Peugeot and Volkswagen etc. not Kia!! As I know even in the US Chevrolet isn’t a premium brand, why should it be in Europe? You can’t define Chevrolet’s position only with these two models when most Chevrolets you see on streets are Sparks and Cruzes. Camaro and Corvette also don’t really feel premium. These are low priced sportscars which can’t compete with a Porsche or a Bmw 6 series for example. Most European Chevrolets use Opel technology, platforms, engines etc. The Cruze is based on the Astra, Trax on Mokka, Malibu on Insignia, Orlando on Zafira and not the other way around… It would be ridiculous and absurd if Chevrolet would be positioned higher than it’s organ donor! And people know that. Chevrolet is seen as a Opel copier but with lower quality feeling imported from Korea. People know that these cars have nothing to do with their American cousins. It’s Opel whose strategy is moving upmarket like VW it does and not Chevrolet. Have you ever compared the Interior of Cruze or Malibu with Astra and Insignia. Do it and tell me than wich one feels more premium…

I think that you just see everything through your Opel glasses. Chevrolet is THE brand that sells, about half of the whole GM car sales. Opel is the little sister with not much importance. Many people would like to see it go because it hasn’t made any profit for years.

“The Cruze is based on the Astra, Trax on Mokka, Malibu on Insignia, Orlando on Zafira and not the other way around” Very interesting opinion but not really true.

You have very german point of view. The rest of the world understand that Chevrolet is the main brand of GM. Opel has very little importance and many people would like to see this loss making branch to go.
Chevrolet has sold more than 2 million Cruze and Opel has sold Astra, well not many. Opel has own versions of different Chevrolet models, not vice versa. I have a Cruze 1.4T LTZ Plus, with leather seats and so on. It feels a lot more premium than Astra just like it should.

Yes, Chevrolet is the main brand of GM, no doubt about that. Did I say something different? But this thread is about Europe, not Asia and not North America. The only reason why Opel doesn’t sell more Astras than it does is because it’s not a global brand. If you add the Astra-badged cars (Verano, Excelle GT/XT) you have about 550k units saled in 2012. Cruze has 780k units saled. So the difference isn’t as high as you say. The European Cruze uses a lot of hard plastic in the interior, the feeling isn’t the same as in the Astra, every european test, I’ve read so far confirms that. Same for the drive feeling. The only Chevrolet-based car Opel uses in the moment is the Antara (Captiva). Well, the result is that the next Antara will be developped in Germany. The Volt/Ampera was a corporate developpement between GM and Opel. The heart of this car, the battery is from Germany.
@werwert concerning the Cruze: “Delta II is General Motors’ current compact car platform, which was developed by Opel in Germany”

A new version of the Epsilon, dubbed Epsilon II, debuted in 2008. It is adaptable for front and all-wheel drive applications. In long wheelbase format, Epsilon II supports US EPA Large Cars, allowing GM to replace the H, K. and W platforms. The architecture was developed by Opel in Rüsselsheim, Germany.

Second try to leave a reply to “The German”… the first was lost by some math error (this needs to be changed!). So here we go:

It is wrong to claim that “The Cruze is based on the Astra, Trax on Mokka, Malibu on Insignia, Orlando on Zafira”.

Fact is that both the Astra and the Cruze are based on the same platfrom Delta II, and that the Rüsselsheim ITEZ played the leading role in developing that platform. Same for the platform Epsilon II, which is the common base for the Opel/Vauxhall Insignia, the Chevrolet Malibu and Impala, and the Cadillac XTS, also for the dead born Saab 9-5 (2010).

And that the Buick Encore, Verano and Regal are slightly modified twins of their original Opel cars (Mokka, Astra sedan, Insignia). The first batch of 45’000 Regals for North America was even manufactured in the Rüsselsheim plant alongside its original version, the Opel/Vauxhall Insignia.

But to repeat my main point: the basis is not the finished car of this or that brand, but the common platform (except when badge engineering is involved as nowadays between Opel/Vauxhall and Buick).

What is with this nonsense about Chevrolet being a global brand! Maybe GM would like it to be but it isn’t. Chevrolet is a big brand in the US, Canada and South America everywhere else it is a non entity. As an example in the UK Vauxhall outsells Chevrolet by 25 to 1 – last month it was Britain’s 24th most popular brand, 24TH!!! Beaten by Dacia, Kia, Hyundai etc etc In the motor trade in Britain Chevrolet are known as The Korean Turd and as far as the car buying public are concerned they (wrongly as it happens) still see Chevrolet as a Daewoo with a Bow Tie stuck on the front. And as far as making losses in Europe you are not seriously going to try and convince anyone that after spending $553m on a sponsorship deal with Manchester United and then selling an average of 1000 cars a month Chevrolet is making money. No.

Europe Peking order from bottom to top (excluding exclusive brands) Peugoet, Citroen, Chevy, Fiat, Renault, Kia, Hyundai, Toyota, Nissan, Honda, Ford, VW, Vauxhall, Audi, BMW, Mercedes, Jaguar. As you can see Chevys near the bottom, sold to people uninterested in cars or just wanting the cheap option.

Upmarket lol, that’s as funny as the rumour peugoet is considering going upmarket! How can a brand be considered upmarket when they produce low quality cheap cars with little in the way of comfort, performance & safety for third world markets? Sorry but you cannot do it all, something has to give.

I wonder what say this Susan Docherty in her Swiss resort about the overall Chevrolet sales in Europe, except the Chevy Camaro and Corvettes imported from the USA? All other Chevrolets marketed in Europe (seen from Germany) are imported from Korea, and the German Chevrolet distribution company, Chevrolet Deutschland GmbH, is a 100% subsidiary of GM Korea, not of GM Company, Detroit. (and GM Korea is not completely controlled by GM, which holds only 77% of the capital, but where the Korean Development Bank has a stake with veto rights).

BTW, in the last months, those Chevrolet sales did not go well; they fell by more than a quarter compated to the previous year.